Maverick Advocaten wins case on quasi-insourcing of household waste processing

Leyla Bozkurt has successfully represented several contracting authorities in proceedings on the merits regarding waste processing in several municipalities. The municipal administrative agency is in charge of the collection and processing of household waste in those municipalities. By means of quasi-insourcing, it awarded the contract for the processing of the waste, among other things, to another waste management company. That waste management company in its turn awarded the contract to a third waste processing company by means of quasi-inhouse procurement. As is customary in the sector, several parties are therefore involved in the collection and, in particular, the (sustainable) processing of household waste.

AVR argued that this “chain” quasi-inhouse procurement should be prohibited on the grounds of breach of Article 2.24b of the Aanbestedingswet (Public Procurement Act). It also constitutes illegal state aid, in AVR’s opinion. According to AVR, the arrangement between the municipalities, the waste management companies and the waste processing company should be put out to public tender rather than being privately awarded by means of quasi-insourcing.

The question presented to the court was whether that arrangement, consisting of several quasi-insourcing processes, meets the statutory quasi-insourcing requirements.

As in the preliminary relief proceedings of 14 January 2020 on the same subject, the court ruled also in the proceedings on the merits that such an arrangement is indeed permitted under Article 2.24b of the Public Procurement Act. In the court’s opinion, it must be assessed each time a contract is awarded whether all the quasi-insourcing conditions, including the control criterion, are met. The municipalities are not required to directly control the final waste processing company in the chain; they merely have to control their own contracting party. It must be established each time a contract is awarded whether the awarding of the contract meets the statutory requirements:

“5.10 (…) There is no reason to assume that the necessary control cannot be exercised by another legal entity, provided that that entity in its turn is controlled by the contract awarding authorities. It is also not necessary for [the waste management company] itself to perform the contract. [The waste management company] is also a contract awarding authority and is therefore also free to award a contract, to perform it itself or to have it performed by means of quasi-insourcing within the limits of public procurement law.”

The court then addressed the various relationships in the chain arrangement regarding the control and activities criterion. The court found that the quasi-insourcing requirements had been met with regard to both the relationship with the waste management company and the relationship with the waste processing company. No (illegal) state aid was involved either:

“5.46 (…) Because AVR has not presented any other arguments in this regard and has not made a specific offer to produce evidence of the arguments previously presented, possible favouring within the meaning of Article 107 of the TFEU has not been established.”

In sum, the court found that “chain” or “double” quasi-insourcing is not unlawful by definition, but that it must be established each time a contract is awarded whether the quasi-insourcing conditions are met. From a legal perspective, this is a confirmation of current practice: multi-tier quasi-insourcing is common, in particular in the waste sector and social welfare services. More information on this case can be found, for instance, in the AD newspaper.

See innovatiepartnerschap.info for more information on sustainable procurement or outsourcing.

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Contact details

Leyla Bozkurt

T +31 20 238 20 01
M +31 6 53 453 021